The competition on the "free" market leads to price wars or quality high end positioning to convince customers they should buy/pay more for your product. But when it comes to a free and online service, the battle is taken somewhere else. For email specifically, it's storage limit.

When Gmail entered the market, the guys at Google took our eyes with incredibly large storage space. Yahoo reacted instantly by increasing it's limit a bit, while Hotmail had a very, very slow reaction.

At this time though, Google keeps increasing its limits, yet it is its turn to have a slow reaction. Hotmail offspring Windows Live Hotmail is at 5 GB and Yahoo is claiming to be offering unlimited storage, while Gmail is still at about 2,9 GB.